In 1862, American missionaries in Lebanon and Syria, under the American Board of Commissioners for Foreign Missions, asked Dr. Daniel Bliss to withdraw from the evangelistic work of the mission in Lebanon to found a college of higher learning that would include medical training. It was felt that this college should have an American educational character, should be administered independently from the Mission, and should be maintained by its own funds. Dr. Bliss travelled to the United States in the summer of 1862 to solicit funds for this new enterprise. By August 1864 he had raised $100,000, but because of inflation during the Civil War it was decided that he should raise a sterling fund in England to start the operations of the college, leaving the dollar fund to appreciate. After collecting 4,000 in England, he travelled to Beirut in March 1866.

On April 24, 1863, while Dr. Bliss was raising money for the new school, the State of New York, granted a charter under the name of the Syrian Protestant College. The college opened with its first class of 16 students on December 3, 1866.

The cornerstone of College Hall, the first building on the present campus in Ras Beirut, was laid on December 7, 1871, by the Honorable William E. Dodge, Sr., then Treasurer of the Board of Trustees. At this ceremony President Daniel Bliss expressed the guiding principle of the college in these words: This college is for all conditions and classes of men without regard to color, nationality, race or religion. A man, white, black, or yellow, Christian, Jew, Mohammedan or heathen, may enter and enjoy all the advantages of this institution for three, four or eight years; and go out believing in one God, in many gods, or in no God. But it will be impossible for anyone to continue with us long without knowing what we believe to be the truth and our reasons for that belief.

College Hall and the first medical building were completed and put to use in 1873, and the bell in the tower of College Hall pealed for the first time in March, 1874. However, College Hall was extensively damaged by a savage explosion in the early morning of November 8, 1991, and the building had to be demolished. It was later rebuilt, and the new College Hall was inaugurated in the spring of 1999.

Since the earliest years, the University has continually expanded and developed new faculties and programs. In 1867, the University started the School of Medicine. Four years later, in 1871, both school of pharmacy and a preparatory school were added. The latter became independent in 1960 and is currently known as International College. In 1900, the University established a school of commerce which was later incorporated into the Faculty of Arts and Sciences (which was established in 1866). When the hospital (currently the American University of Beirut Medical Center) opened in 1905, a school of nursing - now the Rafic Hariri School of Nursing - was also established. In 1910, the University opened a school of dentistry, which operated for thirty years. In the early years of the 1950s several program expansions took place. The Faculty of Engineering and Architecture was established in 1951; the Faculty of Agriculture - now the Faculty of Agricultural and Food Sciences - opened its doors in 1952; and the School of Public Health - now the Faculty of Health Sciences - was started in 1954. The University established in 2000 an independent school of business (later named the Suliman S. Olayan School of Business) as the sixth Faculty of the University.

On November 18, 1920, the Board of Regents of the University of the State of New York changed the name of the institution from the Syrian Protestant College to the American University of Beirut; other charter amendments expanded the functions of the University. All presidents of the University have been in residence at Marquand House, which was completed in 1879.